LONDON, Aug 21 (Reuters) - Interdealer broker ICAP’s energy arm said on Thursday it has launched a global coking coal trading desk in Singapore, taking another step in its push into Asia and capitalising on greater demand for coking coal derivatives.
Coking coal is mostly used in blast furnaces to smelt iron ore for steel production.
ICAP Energy said coking coal derivatives have grown in significance as more participants need to hedge in the highly volatile physical coking coal industry.
Like thermal coal, which is largely used to generate electricity, coking coal has been hit by oversupply as mining output rose and demand stagnated in the past years. This has driven prices to around $110-$115 a tonne, depending on the contract, down from almost $250 a tonne in 2011.
ICAP Energy said the desk’s first trade was between a European-based bank and an international trading company based in Singapore. It was cleared through U.S. futures exchange CME .
It said it expected a considerable increase in volumes over the coming months as the number of trading participants grows.
ICAP Energy has been seeking to expand its services in the Asia Pacific region.
In May, it launched an electronic trading platform for global iron ore, also based in Singapore, aiming to bring its traditional customers closer to the growing Chinese market.
Interdealer brokers make money by matching buyers and sellers of bonds, currencies and other tradeable instruments.
Reporting by Clare Hutchison and Henning Gloystein; editing by Keiron Henderson